The commanding heights: international oil in a changed world

Abstract

In I99I, shortly before the United States went to war against Iraq, Japanese consul-general Masamichi Hanabusa told a New York audience: 'Who will control the oil is a serious issue for the US this time. But it is not a serious issue forJapan. It is of course better that oil is in friendly hands. But experience tells us that whoever controls oil will be disposed to sell it. Hanabusa may not have expressed official Japanese government views, but he nevertheless echoed a sentiment widespread in many quarters, that in the wake of the Cold War, it is time for this kind of new thinking, thinking that questions past dogmas: among them, that oil is a resource that 'the West'-some conglomeration of industrial states or their proxies, such as large multinational companies must control. This question of the old oil security orthodoxy is rooted in a belief that the world is becoming increasingly interdependent.2 Iraq's invasion of Kuwait and the subsequent Gulf War put the control of oil back at the centre stage after nearly a decade in the wings. And for the rest of the I99OS the role of oil will be affected by the many changes-some of them revolutionary that occurred in international oil commerce during the I980s. These changes may require new thinking, like Hanabusa's, especially about OPEC, about the international political framework within which oil commerce takes place, about the role of the former Soviet Union in oil affairs, about everrising US dependence on Middle Eastern oil and, finally, about the effects of the global environmental movement on world oil demand. Before reviewing what is likely to be, however, it is worth touching on what will not be: namely, Iraqi hegemony over the Persian Gulf. The Gulf War of